On CNN’s OutFront Tuesday, anchor Erin Burnett turned to a white board to help illustrate an economist’s point that the Trump administration erroneously cited a paper he co-authored when it tried to justify sweeping tariffs.
Burnett spoke with University of Chicago professor Brent Neimen, who was perplexed by the president’s move when he first learned about it last week. Neimen would later pen a New York Times op-ed saying that the Office of the U.S. Trade Representative “got it wrong.”
On Tuesday, Neimen, a former Treasury Department official in the Biden administration, shared his theory of how the administration butchered his research.
“They they billed it as a reciprocal tariff, so, you know, what I was expecting is that they would look at what other countries charge as tariffs to the United States, and if there are 2, 3, 4 percentage points higher, we might try to bridge that gap with a reciprocal tariff of our own, and maybe they would look also at non-tariff barriers, et cetera,” Neiman said.
“But they did nothing of the sort. The main issue with these tariffs is that they define them such that they would eliminate bilateral trade deficits between the United States and every trade partner that we have in the world, one by one, where we run deficits.”
Neiman added later that under the current method, “you’re instead going to come up with something that can do real harm to Americans, and I think to the whole world.”
Experts quickly figured out that Trump’s tariffs were calculated by dividing the trade deficit the U.S. has with a country by the value of that country’s imports.
As Neimen described it, “It’s a mistaken philosophy to even try to calculate reciprocal tariffs the way that they did.”
The professor added that the more he read into the administration’s reasoning—or lack thereof—“there was what I would characterize as a cascade of of mistakes making these tariffs even broader and even bigger.”
When Burnett presented Neiman the administration’s formula, which resulted in Japan being slapped with a 46 percent tariff, for instance, Neiman took issue with one value that the administration plugged into it. His change resulted in a different dividend: only 12 percent.
“I don’t even know” how the administration came up with the value which led to the 46 percent tariff, Neiman said.
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